Cultural and creative industries (CCI) are a relatively new sector that contributes significantly to GDP and employment and has a favorable impact on other industrial sectors and society as a whole through the spillover effect. The importance of the CCI sector has been gradually recognized since the 1990s throughout Europe and the world, as well as at the EU level. The competitiveness of CCI sector can be observed through quantitative and qualitative data. This master thesis assesses the competitiveness of CCI sector through the analysis of selected competitive factors, as well as through determinants of sector development, such as the internal market, the digital single market, and the innovative, technological and business-organizational framework. EU policy towards the CCI sector is determined, on one hand, by subsidiarity, while on the other, it complements national cultural policies and promotes European cultural diversity. EU cultural policy, both politically and financially, supports the development of the CCI sector through various programs, all under the framework program Creative Europe, thereby contributing to increase its competitiveness. The European CCI sector is one of the leaders in the world, but there are still numerous problems that hinder its development, such as access to finance, etc. On the other hand, this sector has a good prospect of further development if the potential of digital technology is fully utilized and in case of further strong support from EU and national policies.